That's a notch higher than the 1.6 percent growth rate the
government estimated a month ago. The slight change was mostly due
to a little more spending by consumers than first estimated. Still,
that's not enough to have a major impact on the economy.

The second quarter estimate is a sharp slowdown from a 3.7
percent growth rate logged in the first quarter.

Many economists don't expect economic growth to improve much
during the July-September quarter or in the final quarter of this
year. Unemployment -- now at 9.6 percent -- is expected to stay high
or even rise in the coming months.

Americans aren't spending enough to give companies the kind of
confidence in the economy that leads to rapid hiring.

Consumers did boost their spending in the second quarter at a
2.2 percent pace. It was a tad better than the government's
previous estimate of 2.0. But it is still considered lackluster for
this point in the recovery by historical standards. Economists
think consumers will spend at a slightly slower pace through the
rest of this year.

Consumer spending is important because it accounts for roughly
70 percent of economic activity.

In the second quarter, Americans saved 5.9 percent of their
disposable income, the most in a year. Before the recession, they
saved just 2.1 percent.

The economy is the top issue heading into the congressional
midterm elections. Voter backlash could cause Democrats to lose
control of Congress.

GDP measures the value of all goods and services produced in the
U.S.

The sharp drop off in the second quarter mainly reflected
fallout from a bigger trade deficit. A surge in imported goods
swamped growth in U.S. exports to other countries. The bigger trade
gap that resulted shaved 3.5 percentage points from second quarter
growth, the most since 1947.

Another major factor in the economy's slowdown: Businesses added
to their stockpiles of goods at a slower pace in the spring,
reflecting concerns about the spending appetites of their
customers.

The economy's growth has to be much stronger than what the U.S.
has been logging to lower unemployment. Under one rule of thumb,
the economy would have to expand by at least 5 percent for an
entire year to drive down the jobless rate by one percentage point.

The Federal Reserve is weighing new action to bolster the
economy. One likely step is to buy more government debt. Doing so
would be aimed a lowering rates on mortgages, corporate loans and
other debt. The Fed's goal: get Americans to boost their spending,
which would strengthen the economy.

Thursday's report also showed that prices -- excluding food and
energy -- rose at a slower pace in the second quarter. They
increased at a 1 percent annual rate. That was down from a 1.2
percent in the first quarter and was the slowest pace since the
beginning of 2009.

One of the things that Fed doesn't want to see happen is for the
weak economy to lead to a dangerous bout of deflation, a widespread
drop in prices of goods and services, in wages, and in the value of
homes, stocks and other assets.

Meanwhile, the GDP report also showed that corporations'
after-tax profits rose at a slower pace in the spring. Less
generous profits are likely to make businesses think twice about
making big capital purchases or stepping up hiring.

When the government reported in late August that the economy's
growth had slowed to just a 1.6 percent pace, it stoked fears the
economy might fall back into a recession. Since then, those fears
have receded a bit, with reports showing that sales at retailers
and activity at factories are holding up. Nonetheless, with the
economy so fragile, it is more vulnerable to being hurt by any
negative forces.

For each quarter, the government makes three estimates of GDP.
It revises the figures based on more complete data. Thursday's was
the third and final estimate for the second quarter. The government
makes it first estimate of the economy's third-quarter performance
at the end of October.